Decision to bid on new competition contract was not action taken to mitigate loss

Construction Law - Bonds and sureties - Bonds

General contractor abandoned project and new general contractor was engaged. Plaintiff successfully bid to complete work that remained under original subcontract and was paid more for completion subcontract than it would have received for that work under original contract. Plaintiff claimed against defendant under payment bond for unpaid invoices for work competed under subcontract with previous general contractor. Plaintiff was granted summary judgment under labour and materials payment bond issued by defendant. Defendant appealed. Appeal dismissed. Motion judge stated and applied test on mitigation of damages correctly. Plaintiff’s decision to bid on and enter into new competition contract was not action taken to mitigate loss consequent on breach that was general contractor’s failure to pay for completed work. Plaintiff would have secured benefits flowing from completion subcontract regardless of general contractor’s failure to pay for completed work. It was general contractor’s abandonment of subcontract, not its failure to pay for completed work, that created necessity for completion subcontract.

Lopes Limited v. The Guarantee Company of North America (2019), 2019 CarswellOnt 17373, 2019 ONCA 853, K. Feldman J.A., Fairburn J.A., and M. Jamal J.A. (Ont. C.A.); affirmed (2019), 2019 CarswellOnt 1371, 2019 ONSC 804, Cavanagh J. (Ont. S.C.J.).

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